Understanding India's New Patent Laws

When its legislature passed the landmark Patents (Amendment) Act in April 2005, India congratulated itself on having conformed to its obligations under the 1995 World Trade Organization (WTO)/trade related aspects of intellectual property rights (TRIPS) agreement. Its intellectual property rights (IPR) culture seemed to be changing rapidly. The research and development budgets of the major Indian biopharmaceutical companies were rising sharply and Indian pharmaceutical company patent filings, previously concerned mostly with processes for generics drug manufacturing, were shifting decisively towards applications for new drug molecules.1,2

But as we outline in our new report, Advances in Biopharmaceutical Technology in India, the 2005 Act fell short of a complete westernization of India's IPR laws. Indian generics makers still retain significant scope for copycatting patented Western drugs, legally or illegally, without penalty. And Western companies have seen relatively few of their patent applications approved. Industry observers who expected India's IPR climate to suddenly change after the 2005 Act may have been overly optimistic in their estimate of how fast things can change in this industry.

PROTECTIONS FOR EXISTING INDIAN GENERICS

India's shift toward a Western IPR culture was never meant to be disruptive. For example, to hold down the price increases expected after the introduction of patents, the 2005 Act provided that any generic drug made in India before 2005 could legally continue to be made and sold, even if an Indian product patent was granted to the drug's inventor. Under this provision, the generics maker need only pay a reasonable royalty, determined by India's Patent Office (IPO).

COMPULSORY LICENSING

Indian generics makers are further protected by compulsory licensing provisions, including a standard competition boosting provision in the existing law, and also the following export licensing expansion added to the 2005 Act during final negotiations to ensure passage:3,4

92A. (1) "Compulsory license shall be available for manufacture and export of patented pharmaceutical products to any country having insufficient or no manufacturing capacity in the pharmaceutical sector ..."

The provision protects populations in underdeveloped countries from a sudden cutoff in their supply of Indian generics. It also allows Indian generics makers to continue to reverse-engineer, make, and sell Western drugs to these countries. In 2005, for example, Cipla, the Indian generics maker, announced its intention to sell a copied version of Roche's Tamiflu, despite a Roche patent application on file with the IPO. The company presumably intends to rely on compulsory licensing to avoid infringement penalties.5,6

Such cases prompt an interesting question: Will Indians tolerate paying significantly higher prices for drugs that their own country's factories sell more cheaply elsewhere in the world? These compulsory licensing provisions may likely maintain downward pressure on drug prices in the Third World no matter where product patent laws are extended.

ANTI-EVERGREENING AND THE NOVARTIS CASE

TRIPS gives signatories substantial leeway to deny the evergreening of drug patents. Under the new Indian patent law, as under the old law, new uses for an existing drug are not patentable at all. The IPO also has considerable freedom to deny applications for new molecules, which may be existing molecules with minor changes.4

The IPO's use of this provision has already become controversial. In 2006, it denied a patent to Novartis for its cancer drug Gleevec (marketed as Glivec in India). The IPO's argument was that the drug was not demonstrably more efficacious than what was covered by the first Gleevec patent and that the patent had been issued in 1993, while India's new law recognized only patents first granted in 1995 or later. Novartis argued that the beta-crystalline form, patented elsewhere in 1998, and used in clinical trials, was more stable and showed greater bioavailability. But the IPO considered that argument insufficient.7,8